Kerogen, a tar-like substance associated with sedimentary rocks preserved throughout the geological record, is thought to be evidence of organic matter of biological origin. The best evidence, however, comes from the study of carbon isotopes in kerogen or in the carbon mineral graphite. In a nutshell, the separation, or fractionation, of carbon isotopes of different mass can be used to detect former photosynthesis, and hence is good evidence for the existence of former life. If you want to know the details of this process go to 'Understanding Carbon Isotopes', or to the web site http://hjs.geol.uib.no/marinegeology/chapter7-4-2.shtml.
In 1988 Manfred Schildlowski from the University of Mainz, in Germany showed that primitive carbon, which comes from the Earth's mantle, has a value of -6 ‰ (parts per thousand) on the carbon isotope scale. In contrast carbon in limestone, forming in the oceans, has a value of about zero, whereas carbon in living organisms has very low values in the range -20 to -30 ‰. This complementary separation of carbon isotopes into an oceanic limestone 'reservoir' and a biomass 'reservoir' is thought to be the product of living organisms.
The most exciting part of Schidlowski's 1988 discovery is that the separation between the organic and inorganic carbon isotope reservoirs appears to have been almost constant through time from the earliest preserved sediments to the present day, indicating that life has been present on earth from as far back as the sedimentary rock record can go. The Earth's earliest preserved sediments are at Isua in west Greenland and are between 3700 and 3900 million years old and these very ancient sediments preserve a carbon isotope record indicative of former life. Thus there is carbon isotope evidence for life on Earth from as far back as 3.7-3.9 billion years.